Judge Denies FTC’s Attempt to Block $69B Microsoft-Activision Deal

Microsoft’s $69 billion takeover of video game company Activision Blizzard has been granted approval by a federal judge, marking a significant win for Microsoft. In her ruling, US District Judge Jacqueline Scott Corley stated that the Federal Trade Commission (FTC) has not provided evidence to suggest that this merger would substantially lessen competition. The judge believes that the deal will actually provide consumers with more access to Activision content such as the popular game Call of Duty. This decision follows a five-day court hearing in San Francisco, where Microsoft CEO Satya Nadella and Activision Blizzard CEO Bobby Kotick assured the court that Call of Duty would remain available on rival consoles, including Sony’s PlayStation.

Activision Blizzard Inc. saw a 5% increase in its shares following the ruling. The FTC had requested an injunction to temporarily halt the deal until an in-house judge could review it in an August trial. Both Microsoft and Activision argued that such a delay would force them to abandon the agreement they had signed 18 months prior. Microsoft has agreed to pay Activision a $3 billion breakup fee if the deal does not close by July 18.

This case serves as a significant test for the FTC’s heightened scrutiny of the technology industry under Chair Lina Khan. Judge Corley, herself a Biden nominee, expressed skepticism about the FTC’s arguments during the proceedings. She questioned the potential harm that would result from Microsoft removing Call of Duty from rival platforms or offering a subpar experience on competing consoles. She emphasized that the central issue at hand was Call of Duty. “We’re here because of Call of Duty,” she stated.

Near the end of the hearing, Judge Corley acknowledged that the FTC had achieved a victory for consumers due to the promises Microsoft had made to some rivals. Microsoft committed to making Call of Duty available on platforms such as Nintendo’s Switch console and Nvidia’s cloud gaming service for at least the next decade. However, the FTC’s lead attorney, James Weingarten, argued that these agreements were hastily made and insufficient to protect the market. While the Activision takeover has been approved by several countries and the European Union, there is still opposition from the UK’s Competition and Markets Authority, and Canadian regulators are investigating the transaction.

(Read more FTC stories.)